Do you want to start your own cannabis business but have no idea where to start? Like in any industry, there are a ton of jobs, from influencers to accountants and packaging specialists, growers, and retailers. There’s a whole supply chain, and in an effort to guide and encourage you to find your place in the industry, I thought I would share the different types of plant-touching businesses available. That way, you can learn about all the different gears in the engine and hopefully find something that appeals to you.
In my opinion, the first step is understanding the supply chain. You need to know all your options and the different types of businesses available so you can zero in on what you like. From seed breeding to consumption, there are many different types of businesses and jobs that span the entire spectrum.
Here are the different Types of Businesses in the Cannabis Industry:
Breeding
Breeders typically make money by selling seeds or cuttings. I want to emphasize that cannabis is very similar to fashion, with trends and fads that go in and out of style quickly. Breeders are like the top fashion houses that set the trend in the market and create new flavors. They have the ability to set trends and can be selective about who they release their cuts to and how. In addition, becoming a breeder requires more than just experience; it also requires a good heart, good intentions, and a lot of space to work with.
Let me walk you through one breeding work:
Let me walk you through how breeding works. Cannabis is a dioecious plant, which means it comes in both male and female varieties that grow separately. Similar to other traditional forms of breeding, cannabis breeding refers to the sexual reproduction of the plant that involves the cross-pollination of two plants. Male cannabis plants produce a lot of pollen, while the female plant has sticky hairs that catch the pollen.
The idea is to choose rock star parent plants and have them produce offspring that combine the best of both desirable characteristics, resulting in the creation of seeds. But just like any plant, the seeds will have a different variety, with some being good and others bad. A pheno-hunt is necessary to figure out which plants stand out. Some characteristics to consider when making selections are flavor, terpenes, smell, yield, hardiness, and potency. Among these characteristics, I would emphasize yield, hardiness, and potency, as a plant with the best characteristics may not take off if it is hard to grow, has a low yield, or has a long cycle, making it financially unattractive for growers to add to their garden. The flower is king, and to ensure everyone has access to your king flower, breeders often invest in or partner with a nursery.
Nursery
Similar to a nursery school for children under four, a cannabis nursery is a facility where individuals can purchase baby plants, also known as clones, and immature plants, also known as teens or seeds. Clones are typically three to six-inch plants that have rooted, and teens are larger plants that have had more time to grow. The process of making clones is straightforward and not labor-intensive.
The benefit of buying clones and teens for growers is that they can easily switch streams without too much friction in their business. Most importantly, the real value is in the time they save when they go from harvest to immediately planting the next round. A sign of good growth is having a tight standard operating procedure (SOP) to clean and flip the room to get to the next growth cycle after harvesting. That’s why having clones and teens on deck helps keep cycles tight and growers more profitable.
It’s essential to keep in mind that an empty grow room is always losing money when starting out. Therefore, every grower knows the term “no downtime.”
Cultivation
Let’s define cultivation as the art of growing cannabis. Cultivation can occur either indoors or outdoors, and some people swear by one over the other for producing A++ products.
Growing indoors is costly due to rent and power considerations, but the market perceives products grown indoors to have a higher value. Indoor cultivation requires significant control over the environment, essentially making the cultivator a god, which is expensive and hard work. The cultivator controls the sun, wind, water, and nutrients in the soil, which directly affects the yield.
Outdoor cultivation, on the other hand, relies mostly on nature and is typically the cheapest and least resource-heavy way to grow cannabis. “Mix light” is a term used when getting into cultivation, which means growers use natural sunlight supplemented with artificial light if needed.
Growers may also use “light dep,” which stands for light deprivation. This involves covering the plants to make them think it’s night, which can trick them into thinking it’s harvest season and can provide an additional harvest cycle.
Greenhouse
A greenhouse is a cross between growing indoors and outdoors. In the greenhouse, you have the benefit of the sun but can shelter the plants from the weather. With mixed light, an excellent grower can make a greenhouse look like an indoor facility for a fraction of the cost of year-round indoor production. This results in higher profits, and better yields, and is also more environmentally friendly.
Distribution
A distributor is typically responsible for moving cannabis flower products from one point to another. So, how do cannabis products move from one business to another? Distributors can also store weed. A good distributor can help with sales and sometimes provide a sales team, but this option can be expensive for the brand. Aside from that, distributors can transport your weed from the cultivation facility to the co-packing facility, from the cultivation facility to storage, or directly to the store, depending on where you need the product to go.
Having a good distributor can help your business take off because your product will be delivered on time and accurately to the retailer, which is an excellent extension of your brand. However, if your distributor doesn’t show up on time, their inventory is inaccurate, doesn’t store things properly, and doesn’t have good retail relationships, it can be a poor reflection of your brand.
White labeling and copacking
White labeling is a common practice in mainstream business. It is basically when a product is produced by one company but packaged and branded to make it look like a totally different company made it. White labelers typically have access to the equipment needed to make just about anything you can imagine. They will take your flower or extract and help you make your dream brand come to life. However, if you choose to launch a brand or a product using a white label, you may have some limitations on the quality of weed that they have and how much they’re able to produce.
In addition, they are highly organized people and have a ton of credibility.
White labeling is the fastest way to enter the market without having to own or control the whole supply chain. You can just focus on building your brand and let somebody else take care of the complexities of testing, compliance, taxes, and all the nuanced layers. If you’re just starting out and have limited access to resources or aren’t too sure what products you want to bring to the market, it is recommended that you contact a reputable white labeler. Plus, a reputable white labeler will also be able to get you into retailers, introduce you to growers and other important individuals, and provide sales statistics.
Extraction
Cannabinoids are the chemical compounds found in cannabis that have the effects that we all love on our bodies and minds. They are the little crystal structures that sit on the bud, giving it that sugary sparkle. Extraction facilities use various methods to separate the crystals from the plant matter. Extractors pull the chemical compounds of the cannabinoids from the leaves and buds and isolate them for resale. Extracts are a critical component of the industry, as people with chronic health conditions often use some form of extract for treatment.
Most people with serious illnesses require highly concentrated amounts of cannabis to feel relief, and extracts are a tried and true effective method for deriving that medicine. They are also the building blocks for edibles and topicals. Extracts are how edible manufacturers can achieve accurate and consistent dosing every time.
Edibles
Edibles are any food products infused with cannabis. Usually, edible manufacturers will use an isolate or liquid diamonds to infuse foods with, and that is where a good relationship with an extractor can become beneficial when you’re starting out. The cool thing about edibles is that the range of product types seems to be limitless. But there are two important keys you need to keep in mind if you want to venture into this kind of business:
- You have to nail down consistency. If you can’t do that, it is a no-fly zone.
- Make sure you understand the market and your competition. Edibles are not as large of a sales driver for dispensaries running a report on sales by category at my store in Oakland, which obviously if it’s a very specific market flower is roughly around 42 to 52% of sales depending, while edibles are about 11 to 18%. So it’s just that much more challenging to launch and so you really have to have a good strategy that works with retailers.
Topicals
This is pretty much the same as with edibles. You have to have your formulation nailed down, but the strategy here is even more crucial, as the sales category is even more narrow.
Retail
The next category we have is retail, which typically refers to a brick-and-mortar storefront. Historically, these licenses have been the tried and true standard way of selling weed and serving the community.
Personally, I have run a dispensary for many years and what I love about it is seeing the patients and customers. Hearing their stories and seeing all the outfits, and making connections with people I would never meet in any other circumstance, all while bonding over weed! For me, investing in a beautiful shop is important not only for customer experience and retention but also because you end up spending so much time in the store. It’s great to work in a beautiful environment.
Delivery
So, a delivery service is just that – a service that delivers weed. This is a great option if you are drawn to retail but have a limited budget. It is a much more budget-friendly endeavor compared to the other businesses we discussed. While I have never run a delivery service, here are some of the basics of running the business:
- Curating a menu
- Create a killer site
- Having excellent customer service and reliable delivery drivers
Events
Last but not least, let’s talk about events. In my opinion, events are a critical component of the cannabis industry. Our advancements in patient rights and where we are today came from us getting together and sharing our stories of healing. The best part of the cannabis industry is the community, and events are a great way to build that community.
I have planned a ton of cannabis events myself. The first cannabis event I organized was the Oaksterdam University Alumni Cannabis Cup, and it was so much fun. If you are providing only education and there are no sales involved, cannabis regulations may not apply to you. However, if you plan on facilitating sales or consumption, the rules may differ from city to city, county to county, and state to state. Therefore, I would suggest starting with your location and figuring out what the rules are. Once you know what’s allowed, you can get creative and work around certain laws to build your event. This approach will save you a lot of headaches.
And that’s it, we have reached the end of my list. I hope this helps guide you through the different types of businesses that exist in the cannabis industry. I hope this has been helpful to you. Follow me on Instagram @highsalwa and go to highSalwa.com to learn more, download resources, sign up for an email list, and listen to the High Class Podcast. While you are there, please leave a comment or suggest ideas for upcoming episodes.
If you’re competing, or you’re thinking about competing for a license, but don’t know where to start, I went ahead and cleaned up all of my application material, and updated a lot of it and you can get your own copy here: https://highsalwa.com/business-downloads. It is what I use to win licenses in multiple different markets. I have cultivation, production, and retail that are currently available and I’m looking forward to adding more to give you a head start.
